Plaintiffs' Lawsuits Against
Companies Sharply Decline
Court Rulings, Legislators Curb Asbestos, Silicosis Claims;
Indicted Firm Cuts Filings; Questioning 'Jackpot Justice'
By Paul Davies
The Wall Street Journal
Saturday, August 26, 2006
Companies involved in many of the largest and most controversial
legal clashes of recent decades are seeing a sharp decline in
the number of lawsuits filed against them.
In recent months, judges have dismissed or challenged tens of
thousands of individual cases, in matters ranging from claims of
lung damage from asbestos and silica dust to allegations that
the diet drug fen-phen caused heart problems. Moreover, fewer
new claims like these are being launched, as state and federal
courts and legislators attack the methods used by some attorneys
to round up plaintiffs for large-scale litigation.
There is no comprehensive count of claims, but a look at several
key areas -- particularly asbestos and silica claims -- shows
large-scale litigation against single products, known as "mass
torts" and "class actions," is on the wane.
"The future of mass torts and class actions is very much in
question," said Geoffrey Miller, a New York University School of
Law professor who teaches a course on issues in large-scale
This year, new securities-fraud class-action lawsuits are down
45%, to 61 through June from 111 in the first half of 2005,
according to a new study.
Among the factors behind that drop: the federal indictment in
May of the leading securities class-action law firm, Milberg
Weiss Bershad & Schulman LLP, which is accused of paying
individuals to file suits. The firm filed just 17 lawsuits in
the first six months of 2006, down from 55 in 2005's first half
-- and hasn't filed a class-action case since its indictment.
Another contributor is a federal judge's finding last year that
nearly 10,000 claims of lung damage from silica dust "were
manufactured for money." The case involved 200 companies that
manufactured or used silica, which causes an incurable disease
of the lungs known as silicosis caused by overexposure to silica
dust, which is found in sand and rock and most commonly affects
Silicosis claims have soared this decade; for instance, one top
manufacturer, U.S. Silica Co., had seen claims against it spike
to almost 20,000 in 2003 from just a few hundred in previous
years. But after defense attorneys raised questions, U.S.
District Judge Janis Jack, appointed to the bench by President
Clinton, found plaintiffs were being recruited even though they
likely had suffered no harm. She sent all but one case back to
state courts, where many have since been dropped.
The decision has had a major chilling effect on litigation
involving both silicosis and asbestos, which features many of
the same plaintiffs' lawyers, doctors and even plaintiffs.
About 60% of the plaintiffs in the silica case had previously
been plaintiffs in asbestos suits, even though it is extremely
rare to get both silicosis and asbestos. One doctor has made
roughly 88,000 asbestos diagnoses over the years and diagnosed
about 70% of the 10,000 silicosis cases that Judge Jack found
fraudulent. Her ruling also prompted congressional hearings and
state and federal criminal investigations.
The recent shift comes after decades in which trial lawyers
followed a tried-and-true strategy: Recruit lots of plaintiffs,
then pressure companies to agree to a cash settlement in order
to avoid a long, costly court battle. Law firms typically
pocketed up to a third of any resulting settlement.
Litigation against manufacturers of asbestos has been a
particularly crowded arena. More than 700,000 claims have been
filed against more than 8,000 companies in recent decades,
leading to more than $70 billion in payouts and legal bills.
Those expenses have forced dozens of companies into bankruptcy.
Many claims are legitimate. Asbestos is a fire-retardant
mineral that was widely used as insulation and in auto parts
until the 1970s, but was banned after the inhalation of asbestos
fibres was linked to cancer and other diseases. About 4,000
people a year die from mesothelioma, cancer of the membrane
around the lungs, caused by asbestos, according to the World
But critics say the mass-litigation system gives law firms an
incentive to aggressively recruit plaintiffs with dubious
claims, cutting into funds left for people who were truly
"The game for plaintiffs' attorneys is: Seek out doctors
willing to diagnose a problem where the vast majority of doctors
would not," says Richard Nagareda, a professor at Vanderbilt
University Law School. Judge Jack's silicosis opinion "really
lifted the curtain," he says.
Plaintiffs' attorneys counter that the argument is a smokescreen
designed to make it harder for individuals to hold companies
accountable for bad behavior. While many plaintiffs may not
currently be impaired from their exposure to asbestos, they
point out, cancers and other diseases can take years to develop.
Mark Lanier, a plaintiffs' attorney not involved in the asbestos
and silicosis litigation, says the actions of a few aggressive
lawyers has fueled the perception that all plaintiffs' attorneys
are "ambulance chasers."
A spokeswoman for the primary professional group for trial
lawyers says pro-business groups are using isolated incidents to
"distract attention" from efforts by businesses to "evade
responsibility" for harming individuals. "If there are doctors
or lawyers misusing the civil-justice system, they should be
held accountable," says the spokeswoman, Chris Mather. "I would
say the biggest problem is the negligence of big corporations."
Her group, the Association of Trial Lawyers of America, voted
last month to change its name to the American Association for
Justice because of the negative image of the term "trial
In recent years, legislators have taken aim at the tide of
litigation. Earlier this year, Congress passed a tort-overhaul
bill that makes it easier to move many class-actions out of
state courts and into federal court, where judges are more
likely to dismiss dubious claims. The law applies only to
class-action lawsuits, or those in which many hundreds or
thousands of individual claims are merged into one case, so it
doesn't affect cases pursued individually, such as the majority
of asbestos and silicosis suits.
Meanwhile, several states, including Florida, Georgia and Texas,
have passed so-called medical-criteria bills, which require a
treating physician to certify a claimant has been harmed by
asbestos or silica, and not simply exposed, before a lawsuit can
In Mississippi -- a state that that developed a reputation for
what became known in the legal community as "jackpot justice"
due to sizeable damage awards -- lawmakers passed a
legal-overhaul measure in 2004 that placed caps on punitive
damages and made it difficult to shop for friendly courts.
Other court rulings also have cut down on cases. In April,
state-court judges in Ohio threw out about 3,000 asbestos claims
after the screening doctors, some of whom also had been involved
in the silicosis litigation, refused to testify, asserting their
Fifth Amendment right against self-incrimination. Another
35,000 asbestos cases, in which plaintiffs had been diagnosed by
the same doctors, were put aside until they could get diagnoses
from other doctors.
In June, defense attorneys filed a motion in federal court in
Philadelphia seeking to have more than 100,000 asbestos cases,
some involving the same doctors, dismissed.
Mississippi's state Supreme Court has issued several rulings in
recent years that have made it tougher for plaintiffs. One, for
instance, prevents the "bundling" of several plaintiffs into one
lawsuit, a technique that can be used to tie weaker claims to a
stronger case. Another decision requires that plaintiffs live
in the state or show that they suffered harm while in the state
before they can file a claim there.
The broadside against the silicosis and asbestos litigation may
have altered the landscape for thousands of welders who claim
that longtime exposure to toxic fumes from welding rods causes
neurological injuries such as tremors and paralysis. Such
lawsuits once were considered the next class-action wave, but
plaintiffs have lost the first 11 of 12 cases that have gone to
trial, and 1,600 suits have been dismissed.
Still, about 10,000 cases are pending in state and federal
court. And a federal judge in April denied a motion by defense
attorneys to dismiss thousands of claims for medical fraud,
ruling that plaintiffs' attorneys used a "robust" screening
process to "weed out" questionable claims.
The maker of fen-phen, the diet drug withdrawn from the market
because it could cause heart damage, also has had some success
having suits thrown out. The U.S. Attorney in Mississippi has
prosecuted 26 people for filing false or fraudulent claims
against the company, American Home Products, which has changed
its name to Wyeth. A lawyer who represented some plaintiffs was
indicted for filing false claims. Federal prosecutors in
Philadelphia, where dozens of fen-phen cases were tossed out,
have launched a criminal probe into some suits, say people close
to the matter.
Despite the tougher landscape, plaintiffs' lawyers are pushing
ahead with a number of large-scale new actions. Wyeth, for one,
faces a new round of litigation involving a
hormone-replacement-therapy drug, Prempro. Opening arguments
were held this past week in federal court in Arkansas in the
first of 5,000 cases alleging Wyeth ignored signals that Prempro
could increase risk of breast cancer, heart disease and stroke.
Prempro is a widely prescribed estrogen-progestin combination
used to treat pre-menopausal symptoms, such as hot flashes and
Meantime, Merck & Co. still faces more than 14,000 lawsuits
alleging its painkiller Vioxx caused heart attacks and strokes.
Legal observers say Merck's decision to fight each Vioxx case
individually, rather than to try and reach a quick settlement,
was triggered in part by the rising tide of dismissals of claims
in other cases.
It remains to be seen if the drug maker's strategy will work.
Fighting individual cases has the potential to be costly. Merck
has won some initial cases, but has also suffered several
stinging defeats, including verdicts against it in two
individual cases of $253 million and $51 million.
Still, analysts estimate that by fighting cases, Merck has been
able to reduce the number of estimated claims to around 40,000
from 100,000 by discouraging some potential plaintiffs and
lawyers. Analysts also have lowered estimates of the company's
likely total liability to $25 billion or less compared with as
much as $50 billion last year, soon after Merck pulled the drug
from the market.
Write to Paul Davies at